2018 Residential & Hard-to-Reach Standard Offer Programs Workshop October 18, 2018

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AEP Contact Information AEP Texas - Central Division Residential: Jim Fowler 361-881-5790 jjfowler@aep.com Hard-to-Reach: Jordan Mendiola 361-881-5859 jmendiola@aep.com AEP Texas - North Division Residential & Hard-to-Reach: Steve Mutiso 325-674-7287 smmutiso@aep.com Southwestern Electric Power Company (SWEPCO) Residential & Hard-to-Reach: Debra Miller 318-673-3324 damiller1@aep.com

Texas Service Territory AEP is offering the Residential and Hard-to-Reach Standard Offer Programs through AEP Texas (consisting of the Central and North Divisions) and Southwestern Electric Power Company (SWEPCO): AEP Texas – Central Division AEP Texas – North Division Southwestern Electric Power Company (SWEPCO)

Overview Primary objectives of the SOPs are to achieve cost-effective reduction in: summer & winter peak demand annual energy consumption The SOPs each provide set incentives to Service Providers (or Project Sponsors) for the installation of qualifying energy efficiency measures The incentives are based on peak demand (kW) and annual energy (kWh) savings The SOPs utilize approved deemed savings values contained in the State of Texas Technical Reference Manual (TRM) to estimate kW and kWh savings impacts

Overview (cont.) AEP Reviews, approves, rejects applications Pre-approves all marketing material, including social media and telemarketing Performs inspections Processes incentive requests based on inspection results Manages programs and incentive dollars Adjusts programs as needed Verifies PUCT compliance

Overview (cont.) Project Sponsor Enters into SOP Agreement Follows program requirements outlined in manual Identifies project opportunities Markets program and negotiates terms with customer Verifies customer eligibility Installs and accurately reports qualifying measures Reviews the TRM for all measure installation requirements

Annual Project Sponsor Limit 2018 Program Budgets Budgets for the 2018 Residential and Hard-to-Reach SOPs are as follows: Program Budget Annual Project Sponsor Limit AEP Texas - Central Division: RSOP – Large Projects TBD $150,000 AEP Texas - Central Division RSOP: Small Projects $1,166,300 AEP Texas - Central Division HTR SOP $1,087,560 $75,000 AEP Texas - North Division RSOP $530,700 AEP Texas - North Division HTR SOP $314,070 $50,000 SWEPCO RSOP $775,000 $125,000 SWEPCO HTR SOP $700,000 $100,000

AEP Texas – Central Division Residential SOP Small Projects No Reservations Multi-Family properties not eligible All applicants start here Large Projects Reserves funds for program year Milestone schedule (40% of contract met by May 31, 2018; 75% of contract met by August 31, 2018) Program Managers have the authority to cancel/delete any measure entered into P3 and not submitted within 45 days of installation

AEP Texas Residential and Hard-to-Reach SOPs: Small Projects No minimum project size Single-Family projects are eligible Multi-Family properties not eligible in AEP Texas’ HTR SOP No Reservations Project Sponsors with no experience in AEP Texas will start with a cap of no more than $25,000. Additional funds may be allocated per the Program Manager’s discretion based on an analysis of the Project Sponsor’s performance and/or available program budget Program Managers have the authority to cancel/delete any measure entered into P3 and not submitted within 45 days of installation

SWEPCO Residential & Hard-to-Reach SOPs No minimum project size Single- & Multi-Family projects are eligible $25,000 cap on Multi-Family projects No Reservations Project Sponsors with no experience in SWEPCO Texas will start with a cap of no more than $25,000. Additional funds may be allocated per the Program Manager’s discretion based on an analysis of the Project Sponsor’s performance and available program budget. Program Managers have the authority to cancel/delete any project entered into P3 and not submitted within 45 days of installation

Program Reminders for 2018 Incentives rates will be revised for 2018 Duct Efficiency savings will decrease substantially in 2018 An area-weighted average R-value is to be calculated for all homes consisting of two or more levels of Ceiling Insulation. Project Sponsors must use AEP provided calculator No reservations Annual limit is not a guarantee of funds Air Infiltration, Ceiling Insulation, and retrofit Heat Pump replacing electric resistance units measures will require Pre and Post photos to be uploaded into P3 database All documentation will be uploaded into P3 database

Program Issues & Concerns Air Infiltration measure – extremely important not to violate minimum ventilation rule for health & safety reasons All documents must be uploaded as required before a project may be completed and submitted in P3 database The appropriate year and specific program Field Note Forms must be used Accurate reporting of heating type, existing levels of insulation, # of treated areas (returns, vents, plumbing penetrations, light bulbs, etc.) HERs Rater on staff to confirm measure installation quality and functionality to provide energy efficiency without harm to the residential premise (duct efficiency and air infiltration measures) Inaccurate reporting Failure to perform pre & post testing

Program Issues & Concerns (cont.) Failure to provide correct customer contact information Failure to accurately report “existing” R-Value for Ceiling Insulation Failure to provide customers with a positive customer experience, for example: Failure to respond to customers (phone calls, emails, inquiries, etc.) Failure to keep appointments Failure to clean up after completing installations Satisfactory resolution of any customer complaint

Registration & Implementation Timeline 1st Day to begin program registration and submit application October 19, 2017 @ 10:00 a.m. CDT Implementation begins in 2018 Must have approved application status and a fully executed agreement Must have 2018 Host Customer Agreement & Acknowledgement (HCA) Forms AEP Texas SWEPCO Residential SOP January 16, 2018 @ 10:00am CST Hard-to-Reach SOP

AEP Texas Program Website SWEPCO Program Website P3 Program Websites The websites will contain Program Manuals, Required Forms and Updates, P3 Login and Enrollments. Project Sponsors who previously used P3 can apply with their current credentials by clicking on the enrollment link at the following websites: AEP Texas Program Website www.aeptexas.com/save SWEPCO Program Website www.swepcogridsmart.com

Comments and Questions……

Am I Eligible to Participate? Any entity meeting the SOPs application requirements that installs eligible residential energy efficiency measures at a customer site with residential electricity distribution service from AEP Texas or SWEPCO is eligible to apply for participation in the SOPs Eligible Project Sponsors may include: Energy service companies Retail electric providers National or local companies that provide energy-related products (e.g., insulation or HVAC) Product retailers, if they install the particular energy-efficient products sold as part of the SOPs

Project Sponsor Requirements At a minimum, a Project Sponsor must have the following requirements to apply for participation in the SOPs: Valid insurance (e-mailed directly to appropriate Program Manager by insurance agency) All appropriate licenses or certifications Home Energy Raters (HERs) or Building Performance Institute (BPI) individual required to be on staff for any Project Sponsors(s) performing Duct Efficiency and/or Air Infiltration measures References Evidence of technical and managerial capabilities and experience Current year calibration of equipment certificates and serial numbers if performing Duct Efficiency and/or Air Infiltration measures

How Do I Participate? Review applicable SOP Manuals Review each SOP Agreement Complete and submit on-line registration If applicable, upload testing procedures at time of registration Enrollments will be reviewed upon receipt of all required documents Enrollment approvals will be considered based on Project Sponsor qualifications, performance history, proposed measures, etc., to ensure program goals will be achieved with quality installations and timely reporting

How Do I Participate? (cont.) Proof of statutorily-required insurance submitted by insurance agency Once enrollment is pre-approved, enter into an agreement with AEP Texas and/or SWEPCO to install approved measures Refer to Program Manuals and Program Websites for additional information Refer to the latest Technical Reference Manual (TRM) for measure installation standards (Eligibility and High-Efficiency Condition) and savings calculation detail

Customer Eligibility Residential distribution customers of AEP Texas and SWEPCO are eligible to have measures installed at their homes as part of the SOPs Eligible customers shall be identified by the Electric Service Identifier (ESI ID) numbers on their electric bill: AEP Texas – Central Division customer ESI ID’s begin with 100327894…. AEP Texas – North Division customer ESI ID’s begin with 102040497…. SWEPCO customer ESI ID’s begin with 101769896….

Customer Eligibility (cont.) Hard-to-Reach customers are defined as residential customers who have household income at or below 200% of federal poverty guidelines *Income ceilings are for February 1, 2017 – January 31, 2018 or until 2018 values are published Income guidelines are updated every January and posted on the PUCT website http://www.puc.texas.gov/industry/electric/forms/

Eligible Properties Eligible residential properties include: Single-Family properties – Defined as residential dwellings consisting of two or less units (i.e., a duplex or less) Mobile Home properties – Defined as manufactured homes Multi-Family properties - Defined as residential buildings containing three or more dwelling units. These include - Individually metered Multi-Family properties Individually metered townhomes Residential dwellings or additions completed before January 1, 2016 are eligible for the SOPs

Marketing Neither AEP Texas or SWEPCO will provide marketing assistance or endorsements Approved Project Sponsors: are encouraged to use the one-page brochure provided by AEP Texas and SWEPCO available on the program websites are required to submit all other marketing material, including social media and telemarketing, for pre-approval by the appropriate Program Manager prior to use shall NOT represent themselves as employees of AEP Texas and/or SWEPCO while conducting marketing activities must comply with all the requirements of the National “Do Not Call” Registry and the Texas “No Call” lists SWEPCO approved Project Sponsors are not allowed to use telemarketing of any kind to promote energy efficiency services. Any use will result in immediate termination from the program.

Identify Project Opportunities Verify customer eligibility Original customer signature and date on all required forms Regularly check program fund availability on P3 Database Install approved measures Original customer signature and date on all required forms to verify completion If applicable, supply pre and post CFM readings and “R” Value of Existing Ceiling Insulation on HCA HCA must be signed by Project Sponsor and Subcontractor (if applicable) Submit all projects within 45 days of installation on P3 Database

Required Forms Host Customer Agreement and Acknowledgement Customer authorizes work and verifies work completion Customer acknowledges installations are subject to inspection Requires Pre/Post CFM readings for DT and IN Requires existing R-value for CI Field Notes Form to be used by crews/installers in the field to capture all relevant measure installation data that is used to calculate savings Income Eligibility Verification Forms for Single-Family and Multi-Family properties* (Hard-to-Reach only) Customer Education Materials (Hard-to-Reach only) *SWEPCO HTR Only

Measure Installations Please review the TRM and Program Manuals for all measure requirements. Approved measures must be installed properly and should be capable of performing their intended function Duct Efficiency and Air Infiltration measures include prescriptive requirements (where applicable) that must be treated as a part of the respective measures. Failure to complete prescriptive requirements will result in total measure failure Leakage-to-Outside testing required for duct efficiency measure 10 year period between measure installations per property

Reporting Requirements All measure installations must be submitted within 45 days Inaccurate reporting results in failures Upload all necessary documentation prior to completing a project. Your incentive payment is expressly and specifically conditioned upon receipt of all necessary documentation Incentive payments will be processed after inspections have been completed for projects submitted the previous month

Installation Inspections Random sample of measure installations Verify that number of installed measures equals number of reported measures Verify that measure detail reported accurately in the database and on the Field Notes Form Verify measure is installed and capable of performing its intended function Verify that measures qualify and that installation standards were followed

Inspection Adjustments All installations will be evaluated on a measure-by-measure basis to calculate an adjustment factor (AF) for the savings and incentive payment The calculated AF will then be applied to all the un-inspected sites AF = Incentive total for measures that pass inspection Incentive total for all measures tagged for inspection

Duct Efficiency Poor application, registers not sealed

Duct Efficiency Failure to complete prescriptive requirements

Air Infiltration Poor application, must be sealed with durable air barrier materials.

Ceiling Insulation Insulation completely missing in this area

Ceiling Insulation Wrong “existing” R-Value reported for Ceiling Insulation

Break

Customer Care Training

CUSTOMER EXPERIENCE VALUES Greet Customers Positively Respond To Customers Promptly Easy To Do Business With Assume Positive Intent Treat Customers With Respect & Dignity

GREET CUSTOMERS POSITIVELY Greet customers in a courteous, friendly, and professional manner Identify yourself, the Company you work for and your business purpose when you place a call, or in person Communicate using a pleasant tone and appropriate body language

RESPOND TO CUSTOMERS PROMPTLY Respond to any standard request within 24 hours, during normal business hours Listen effectively to our customers and promptly assist them. Follow-up and keep customers informed with an email or by phone. Quickly communicate any unexpected changes

EASY TO DO BUSINESS WITH Maintain an updated and professional voicemail and email message, including cell phone number Accommodate reasonable requests and consider options

ASSUME POSITIVE INTENT Demonstrate consideration, cooperation, and be open-minded to the customer Be engaging when resolving issues by discussing problems and working toward agreed upon solutions Make it your goal to exceed the expectations of all customers

TREAT CUSTOMERS WITH RESPECT & DIGNITY Show concern for the customer’s safety and issues. Hold yourself and others accountable for using appropriate comments and behaving in a professional manner at all times. Be mindful of the customer's experience

We are employed because of the customer. SHOW GRATITUDE!

Conclusion…… Thank you for your attendance!